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Obama Signals Willingness to Compromise on Offshore Drilling

Energy, often a back-burner issue in presidential campaigns, took center stage last week. Democratic presidential contender Sen. Barack Obama of Illinois lit the fire when he signaled that he would be open to allowing drilling off certain coastal states as part of a larger compromise on energy policy. This marked a sea change in his position on oil and natural gas production in the federal Outer Continental Shelf (OCS).

Obama indicated that he could support a bipartisan, comprehensive bill offered earlier this month by five Senate Republicans and five Democrats -- known as the "Gang of 10" -- that seeks to open additional Gulf of Mexico areas to drilling, and would allow the states of Virginia, North and South Carolina and Georgia to opt into leasing off their shores (see NGI, Aug. 4). The measure would not open coastal areas off states such as New Jersey and California or New England states, which have bitterly opposed offshore activity.

The Energy Reform Act of 2008 (ERA) would allow production beyond the 50-mile limit from shore and would require all new production to be used domestically. It also would create a commission to make recommendations to Congress on future areas of the OCS that should be considered for leasing. And the bill would provide for revenue sharing with states that allow leasing off their coastlines.

The bipartisan bill "includes a limited amount of new offshore drilling, and while I still don't believe that's a particularly meaningful short-term or long-term solution, I am willing to consider it if it's necessary to actually pass a comprehensive [energy] plan," Obama said in a speech last Monday in Lansing, MI. "I am not interested in making the perfect the enemy of the good -- particularly since there is so much good in [the Gang of 10's] compromise that would actually reduce our dependence on foreign oil."

The Democratic presidential candidate first hinted at a change in his position on offshore drilling during a previous speech in Florida. "If we can come up with a genuine, bipartisan [energy] compromise in which I have to accept some things I don't like, or the Democrats have to accept some things that they don't like, in exchange for moving us in the direction of energy independence, then that's something I'm open to," Obama said.

The softening of Obama's opposition to offshore drilling comes nearly two months after Republican presidential contender Sen. John McCain of Arizona announced his support for repealing the congressional moratorium on offshore drilling, so that coastal states can choose the option to allow drilling (see NGI, June 23).

Republicans immediately accused Obama of flip-flopping on the offshore issue. "I am not surprised that he's hedging on this issue. But the fact is he still opposes offshore drilling. We need to drill now," McCain said in an interview with ABC's Diane Sawyer.

Some believe Obama's willingness to compromise on the issue may be a sign that the wall between Republicans and Democrats is crumbling, but others aren't that optimistic. The standoff between the two parties, particularly on the issue of OCS drilling, could be even worse when Congress returns for a short session in September. The ERA proposal takes Speaker Nancy Pelosi's home state of California off the table, but it's unlikely to thaw her opposition to expanded offshore drilling. .

With the exception of his new stance on OCS drilling, Obama toed the Democratic line on energy policy on the campaign trail last week. "I...believe that in the short term, as we transition to renewable energy, we can and should increase our domestic production of oil and gas," Obama said. But, like other Democrats in Congress, he thinks producers should first drill on the "68 million acres they currently have access to but haven't touched. And if they don't, we should require them to give up their leases to someone who will.

"We should invest in the technology that can help us recover more from existing oilfields, and speed up the process of recovering oil and gas resources in shale formations in Montana and North Dakota, Texas and Arkansas and in parts of the West and Central Gulf of Mexico."

In addition, Obama called for the U.S. to sell 70 million barrels of oil from the Strategic Petroleum Reserve for "less expensive crude, which in the past has lowered gas prices within two weeks."

The federal government also should lease more of the National Petroleum Reserve in Alaska for oil and natural gas production, and "work with the Canadian government to finally build the Alaska Natural Gas Pipeline, delivering clean natural gas and creating good jobs in the process," Obama said.

He also pledged to "require that 10% of our energy comes from renewable sources by the end of my first term -- more than double what we have now. To meet these goals, we will invest more in clean technology research and development."

Moreover, "I'll...extend the production tax credit for five years to encourage the production of renewable energy like wind power, solar power and geothermal energy," he noted. "We'll also invest federal resources, including tax incentives and government contracts, into developing next generation biofuels. By 2022, I will make it a goal to have six billion gallons of our fuel come from sustainable, affordable biofuels and we'll make sure that we have the infrastructure to deliver that fuel in place."

He also said the United States needs to modernize its national utility grid so that it's accommodating to new sources or power, more efficient and more reliable. And "I will...call on businesses, government and the American people to meet the goal of reducing our demand for electricity 15% by the end of the next decade. This is by far the fastest, easiest and cheapest way to reduce our energy consumption -- and it will save up $130 billion on our energy bills."

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